Skating to Where the Puck is Going: Supply Chain Technology Predictions

There is a very popular quote from ice hockey great Wayne Gretzky in which he famously said, "I skate to where the puck is going, not where it has been." This is a perfect metaphor for Gartner's annual Supply Chain Technology Predictions. We use our observations from primary research, augmented by many thousands of annual client and vendor interactions, to look ahead by about three to five years and try to envisage where the puck - or in this case, supply chain technology - is going to be. This helps our customers build their strategies to beat their competition to the puck.

We explore Gartner's Supply Chain Technology Predictions in our latest podcast available on Gartner.com, Spotify, Apple Podcasts and Google Podcasts

For 15 years, Gartner has conducted a comprehensive study of supply chain technology user wants and needs, which explores supply chain professionals' strategies, goals, challenges and investment plans for supply chain technology. Over the years we have consistently found that across industries, company sizes and geographies, more than 70% of supply chain IT budgets are earmarked for keeping the lights on and basic business improvement IT investments. These might be basic applications or IT infrastructure support and maintenance or investments in upgrading or replacing existing applications to improve basic business performance. Regrettably, less than a third of the IT budget is available for transformational investments (see Figure 1). But this is where competitive advantage and business innovation come from. Respondents were also asked what their top three supply chain technology funded initiatives were in 2021. Improving decision making overall - and notably at the edge - along with digital transformation, dominated company investment plans.

What the Future Holds

Some of the drivers behind this year's supply chain technology predictions are:

• Labor as a Constrained and Expensive Asset (By 2026, 75% of large enterprises will have adopted some form of intralogistics smart robots in their warehouse operations.)- Increasingly, work will be shifted from humans to cyber-physical systems (e.g., robots and automation) because labor is becoming an increasingly constrained asset that is driving up costs. Today, the vast majority of organizations do not have the people or organizational structure to absorb these technologies.
• Agility/Adaptability/Flexibility (By 2026, 25% of supply chain execution (SCE) vendors will have rewritten their core application to a microservices architecture, but only 5% of SC organizations will have adapted to true composability.) - Complexity is a growing challenge for supply chains. When combined with increasing business volatility, companies recognize the need to focus more attention on the adaptability of any new systems they buy. Agility demands that applications portfolios become more accommodating to rapid change, which leads to the notion of composability. Composability is an emerging concept that starts with a belief that anything is composable and that culture must emphasize that the assembly and reassembly of components is the fastest, most flexible path to business outcomes.
• Embedded Intelligence (By 2026, more than 75% of commercial supply chain management (SCM) applications vendors will deliver embedded advanced analytics, artificial intelligence and data science.) - As noted, supply chains are getting more complex and fast-paced, which is driving the need for more advanced analytics embedded within core supply chain applications. Initially, most embedded intelligence will be delivered by the original solution vendor, but composability says that in the future this could be a service provided by someone else who is used at the point of need.
• Distributed Intelligence or Intelligence at the Edge (Through 2025, 25% of supply chain decisions will be made across intelligent edge ecosystems.)- Once again, supply chains are getting increasingly complex, volatile and fast paced. This demands that companies be more responsive and able to make critical decisions in near real time. Decision making at the edge challenges the centralized command and control systems and processes of the past and requires new IT architectures to support this necessity. In the real-time world of supply chain, there is legitimate concern about latency between the core centralized applications in the cloud and what is happening on the edge. Edge ecosystems utilize portfolios of technologies, combined with embed machine learning and analytics. They operate autonomously in remote or virtualized settings where access to centralized systems may be suboptimal or not possible.
• Responsiveness and Resiliency (Through 2026, 80% of companies will suffer significant value loss due to a failure to merge their digital supply chain twin and control tower initiatives.) - The COVID-19 pandemic highlighted that global supply chains are fragile, which elevates the importance of building for responsiveness and resiliency. Regrettably, too many of the supply chain technologies already in place were not built with responsiveness as a core design principle. In most cases, a significant amount of manual effort was needed upfront to configure and build inflexible process models. Because of this, solutions were typically hard and time-consuming to adapt when faced with significant change. A new paradigm is needed, such as the digital supply chain twin, that is a more dynamic, flexible and responsive way to associate information about and across your end-to-end supply chain.

Dwight Klappich
VP Analyst
Gartner Supply Chain
[e-mail]

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